12/30/2008

To: All GM Dealers
Subject: GMAC APR RATES
Date: December 30, 2008

I wanted to update you on the recent actions that have taken place with regard to GMAC obtaining bank holding status.

We believe GMAC’s ability to extend financing will be greatly enhanced.

To that end, I am pleased to tell you that starting today, GMAC will be offering reduced rate financing as low as 0% APR for up to 60 months on select new cars and trucks. The reduced rate financing is available to qualified buyers (S, A, B and C tiers) through January 5, 2009.

In addition, we have stackable bonus cash and/or dealer cash of $500 to $4,250 on some models.

Following are examples of the supported rates being offered:

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I know this is The Truth About Cars, not the inside baseball truth about the finance companies that prop-up the domestic automobile manufacturers. Dot com. But we’ve been following this story because, well, if GMAC had gone down, GM would have gone down and GM still makes cars. Well, after the holidays. And the shenanigans involving the federal government’s rescue of GMAC have been nothing less than shameful. First, Uncle Sugar signals GMAC in no uncertain terms that if the bankruptcy-bound lender doesn’t convert 75 percent of their debt into equity they can go ahead and fail. Then, on Christmas Eve, before we learn the results of that d-for-e swap, the Fed says, never mind, you can be a bank. We’ll just use our “emergency” (as opposed to superhero) powers to bend our own rules. And still GMAC doesn’t reveal the success or failure of the swap, claiming they needed time to tabulate the results. And now… we know. Surprise! Not. The Wall Street Journal reports “Struggling finance firm GMAC LLC said Wednesday that bondholders tendered $21.2 billion in notes in its bid to raise capital for its new status as a bank-holding company. The lender’s goal had been to raise $30 billion by converting 75% of its issued debt into preferred stock holdings. The offer expired Friday after having been extended four times.” So they received prior approval AND a $6b federal (that’s your taxes) investment and they STILL missed the legally mandated target by $8.8b. One rule for you, one for former U.S. Treasury Secretary and current Cerberus Chairman John Snow.

The Chevy Aveo has been on TTAC’s Ten Worst List since we inaugurated the public service. In 2008, it remains at the top of the steaming pile, garnering a gong at the number three spoty. To quote from this year’s encapsulation: “The Aveo continues to offer a snap-crackle-pop interior, mediocre gas mileage, roly-poly handling and gutless onramp terror.” So how in the world could Detroit News carmudgeon Scott Burgess find anything nice to say about Chevy’s Korean American revolution, never mind a whole column’s worth? Let’s s-s-s-s-sample. “It’s roomy, peppy and comes with more personality than similarly priced competition.” Oh really? Vera, Fit, Yaris? “The hatch helps the Aveo5 stand out. It’s a good look, and it plays multiple utilitarian roles, such as making it extremely easy to park as well as load big things in the back. Few other exterior features add to its looks. It’s not like the designers had a lot of sheet metal to work with.” So… it’s a hatchback. Gotcha. “Chevy upgraded the interior materials, though there is a certain economical feel to this vehicle. Every part of the cabin feels well built, though it’s difficult to know how it will hold up over the long haul.” “Economical feel.” Is that a synonym for horrifically cheap?

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Never let it be said that TTAC doesn’t kick a bad idea when it’s down. (It’s the best way to make sure it stays down.) Obviously, it’s no secret that myself and several members of TTAC’s crack (smoking) freelance team consider E85 the biggest boondoggle outside of the Motown meltdown boondoggle. Corn juice for fuel is a fundamentally flawed concept on environmental, energy, practical and even a geo-political basis. But even as the U.S. ethanol customers line-up none deep for their chance to prove that “no one ever died defending a corn field,” even as the ethanol industry continues to block cheap E85 imports from Brazil, even as the major players suck-up to Uncle Sugar to secure a $1b bailout (no really) to stay alive in a business where they already enjoy a .50 a gallon “blender’s credit” and a federal requirement for someone somewhere to use the stuff (a.k.a. the 36b gallon by 2020 Renewable Fuels Standard), they’re shifted gears to open a second front in their war against common sense. AG Week reports that the push for a federal mandate to raise the ethanol content in regular gas from E10 to E15 (and beyond) continues apace.

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It won’t be long now: a parody ad of Chrysler’s thank you for your “investment” ad, to join the bailout parody ad and the anti-anti-bailout (i.e. Toyota) viral email. Meanwhile, Chrysler’s still catching heat for spending big bucks on the post-bailout ads in USA Today, The Wall Street Journal, The Atlanta Journal Constitution, online (even TTAC!) and other media. TTAC flagged the obvious waste ogf taxpayer money and condescension on the 23rd, but the MSM have just caught on. Autoblog reports today on Fox News’ Monday report slamming the automaker for the campaign. Their boy Newt’s minion does the dirty. “‘It’s quite ridiculous to be spending that kind of money,’ said Princella Smith, national spokeswoman for American Solutions, an organization headed by former Republican House Speaker Newt Gingrich. ‘Those ads are just a precise example of the fact that they do not get it … and it’s just in our faces.’” So, now how much did they pay? “A full-page ad in The Wall Street Journal runs between $206,000 and $264,000, and a full-page ad in USA Today runs between $112,000 and $217,000.” Wow. Still, $4b buys you a lot of ad space, if not a single class-leading automobile. Oh, and why haven’t MSM picked-up on the fact that the ad’s picture is a fake?

If you like to drive like your hair’s on fire, deciding between the athletic American 2008 Chevrolet Corvette hardtop coupe and the Bavarian corner carver 2008 BMW 335i is a bit like choosing between cocaine and cocaine. If you’re a more sensible motorist, it’s like choosing between A.H. Hirsch 16 Year Old Reserve Pot Stilled Sour Mash Straight Bourbon Whiskey and Schloss Rüdesheim VSOP brandy. in either case, the question is a matter of taste and price. Hence this test: which performance car offers the better buzz for $40k?

A few months ago, I asked TTAC’s Best and Brightest if I should drive my Mustang in the snow. After very little soul-searching, and very much viewing of Mustangs, Supras, Bimmers and Porsches doing snow donuts on YouTube, the decision practically made itself. So, I had the car anti-rusted and bought a set of Kingstar W411 winters (made by Hankook) on black wheels and off I went, with no extra junk in the trunk (hey – it might ruin the steering). I’ve driven it almost daily; it’s faced Montreal’s harsh winter with gusto. Even during the heaviest storm of the year to date, I had no problem getting around. Obviously, I’m delicate on the throttle and I pay attention to the brakes, lest I lock up the wheels and transform my little pony into a giant, lead sled. One caveat though – freezing rain. One day where we received all manner of precipitation (rain, then freezing rain, then snow) the car got stuck in a parking space in a street the city of Montreal had characteristically forgotten to clear. A little back-and-forth pushin’ and rockin’ while a good samaritan floored the gas and she was soon free, but I almost missed a dinner date. Lesson learned for next time: Bring a shovel and carry traction-aids.

When the clock strikes 12 tonight and the year ends, Americans will most likely have bought 13.1m light vehicles. That according to Erich Merkle of Crowe Horwath LLP, the man everybody seems to turn to when it comes to counting units.

Next year will be much worse.

The first quarter of 2009 will be an atrocity. “Merkle expects that the industry’s seasonally adjusted annual rate will be 10.5 million units, an abysmal rate that would match that of the fourth quarter of 2008,” says Automotive News (sub.)

By summer, Merkle sees the recession coming to its end. “His forecast: an annual sales rate of 11 million units in the first half, and 13.5 million to 14 million units in the second,” says Automotive News. For the coming year, Merkle reckons 12.8m units will sold in the U.S.

Detroit thinks, Merkle is an optimist.
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For the last time this year, a short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Until Jan 4, 2009, WAS will be filed from Tokyo.

Toyota has the biggest: Bruises and all, Toyota still stands proud. ToMoCo still has “the highest market capitalization among firms listed on the first section of the Tokyo Stock Exchange as of the last trading day of 2008, even though its market value tumbled by more than half in the year,” reports a relieved Nikkei (sub.) The automaker’s market cap is 10.01 trillion yen ($111,110,999,987.77 at today’s rate,) down 54 percent from the end of 2007. The overall market, as measured by the Nikkei Stock Average closed at 8,859 on Tuesday, down 42 percent from a year earlier. GM, Ford, and Chrysler on the other hand – don’t even mention it.

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Oregon’s governor Ted Kulongoski is currently getting some flack in our comments section over his pay-per-mile road tax scheme. But this is not the only green-oriented plan Kulongoski is floating, having already confirmed that Nissan will provide EVs for the state fleet in 2010. Another controversial transportation proposal of Kulongoski’s is to replace the $1,500 hybrid tax credit with a $5k credit towards the purchase of an all-electric car. If this plan does go into effect, it will make your Tesla Roadster (or Nissan Better Place-mobile) a little more affordable, just be prepared to have your doors blown off by a Datsun 1200 when you hit the road. Check out Oregon Field Guide’s visit with White Zombie, the zero-emissions ass kicker you never saw coming.